Zell makes himself known in a hurry

Company's new chairman and CEO says he felt need to be 'direct agent of change'

December 21, 2007|By Phil Rosenthal

He's a 66-year-old smoker and aficionado of fast motorcycles who prides himself on his knack for risk assessment. Of course, Sam Zell wasn't going to sit on his hands waiting for change so he can realize a return on his investment.

"I became the CEO today because I felt that I needed to be a direct agent of change and I promise you won't be disappointed in me fulfilling that objective," he said.

In short order, once the deal for the 160-year-old media concern was formally completed, Zell made himself known as loudly and distinctively as the open-collared, rainbow-striped shirts he favors.

He unveiled a new board of directors with wide-ranging expertise in traditional and new media. He put a couple of longtime associates in key management positions. He introduced himself to staffers and staged a news conference. Yet he still had time for a quick smoke outside the iconic Gothic building's lobby. Holiday shoppers on Michigan Avenue scurried by, oblivious to the billionaire force of nature puffing away in their midst.

Forget the first 100 days for this administration.

Watch the first 100 hours.

"As you're going to see, he's awfully good at this," said Randy Michaels, a longtime Zell associate who is now Tribune's executive vice president and CEO of Interactive and Broadcasting, a division that will include the company's six smallest papers. "You could make the case that he's serially lucky, but I think after this many successes, there's some evidence he knows what he's doing."

Within an hour or so of Zell's news conference, Michaels had entered Tribune Co. into a letter of intent to create a broadcast management company -- Michaels dubbed it The Other Company -- that will provide shared services for both Tribune TV stations and those of Local TV LLC, a company he headed until that morning and in which he remains invested.

Funded by Oak Hill Capital Partners, Local TV has nine stations in eight midsized markets acquired earlier this year from the New York Times Co. There have been rumors in recent weeks, which Michaels would not confirm, that it is in line to acquire nine Fox owned-and-operated stations.

The idea is The Other Company can produce savings for both Tribune and little Local TV in management, technology and other overhead costs, and possibly even generate income for The Big Company.

It's a new way of looking at an old business. But anyone who has been tracking this deal -- "the transaction from hell," Zell said at the news conference, noting he was among the few people who thought he could complete it -- should be familiar with that innovation.

The almost-too-complex structure Zell's team came up with to make the $34-a-share Tribune work at a time when old-line media companies are losing eyeballs and income to the Internet, avails itself of tax advantages from an employee stock ownership plan and S corporation status. But Zell also believes there is still plenty of cash to be wrung from Tribune's businesses, which include the Chicago Tribune, Los Angeles Times and WGN-Ch. 9.

"This is classic Sam," Michaels said. "Sam has made a lot of money going against the grain. There are a lot of people who are worried that newspapers are just going to go away. ... [They think] it's all going to be completely replaced in the same way that the airplane was going to completely replace the railroad. ... Sam Zell has made a lot of money on railroads."

Shaking hands like a seasoned politician, Zell at least momentarily energized a Chicago Tribune newsroom worn down by dour industry projections and word of cutbacks throughout the media world. His visit was like a first date, when everything is possible and no one has been let down.

"We're going to have some fun," he told more than a few, a truly novel concept of late.

One reporter handed him a card. Another told him he had been at the paper 34 years and liked the symmetry of Zell's $34-per-share Tribune deal. A woman sitting in front of a computer asked how he liked his picture on the Chicago Tribune's Web site, but he didn't respond and was moving on to the next cluster of staffers when she offered to change it if he wanted.

It's just as well. A lot of people are lying in wait for Zell to do something to interfere with the content of his papers, TV stations or Web properties, something he has said repeatedly he will not do.

From the number of times he gets asked about whether he intends to influence news coverage, it's almost as if interviewers don't quite believe his agenda could be as simple as making boatloads of cash, that he must also want a platform from which to shout out his views.